TABLE 3-1 Annual Growth in Gross Domestic Product and Electricity Demand by Decade, 1960-2010 (percent)a

Period

Gross Domestic Product Growth

Electricity Demand Growth

1960-1970

3.8

7.3

1970-1980

2.8

4.2

1980-1990

2.6

2.6

1990-2010

1.8-2.4

1.0-1.5

a Italics indicate projected values.

Source: EIA (1994a).

will grow 1.0 to 1.5 percent per year to 2010, while the gross domestic product over the same period will grow 1.8 to 2.4 percent annually, for ''low" and "high" economic growth cases. The decrease in electricity demand growth relative to growth in the gross domestic product through 2010 is expected to result primarily from energy efficiency improvements associated with demand-side management and compliance with the directives of EPACT. The industrial sector is the fastest-growing demand sector in the EIA projections.

Alternative estimates from Data Resources, Inc. (DRI)/McGraw-Hill suggest that the trend in electric demand growth will average 2.0 percent per year from 1993 to 2010, during which time there will be a 2.3 percent annual increase in the gross domestic product (Makovich and Smalley, 1993). These projections assume a smaller impact of demand-side management on electricity demand than the EIA projections.

EIA projections of new capacity needs to meet new demands and to offset plant retirements are summarized in Figure 3-1 (EIA, 1994a). These new capacity requirements are in addition to the augmentation of existing resources through electricity imports and through plant life extension and repowering (see below). Between 1990 and 2010, utilities are expected to install 110 GW of new capacity in the EIA reference case but retire 60 GW, for a net capacity increase of 50 GW. In response to legislative changes aimed at making electricity production more competitive, NUGs and cogenerators are expected to add an additional 73 GW, accounting for a large share (40 percent) of total new capacity additions of 183 GW over the forecast period. Figure 3-1 shows that new capacity will be needed particularly between 2000 and 2010, during which time repowering and other options will be insufficient to meet increased demand. The surplus capacity of the 1980s still persists in some areas, and it will probably not be completely employed in many areas until the turn of the century. Thus, projected capacity additions lag projected increases in demand (Makovich and Smalley, 1993).

Table 3-2 compares several forecasts of total U.S. generating capacity in 2000 and 2010. Detailed comparison of these estimates is difficult because of



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